India faces power crisis amidst a scorching summer; what's causing the blackouts

Reports of power shortages across the country are trickling in as coal inventories hit the lowest pre-summer levels in nine years triggering blackouts. Concerns are now rising on how India will cope with surging demand for power amidst record high temperatures this summer season.

With India experiencing its hottest March in 122 years, electricity demand is expected to rise at its fastest pace in at least 38 years, led by the ever-growing demand to irrigate farms and run air conditioners in homes.

These are just a few of the factors that are at play here. Coal India and the coal ministry had asked power plants to stock up, but the utilities kept reducing their inventories. For instance, Andhra Pradesh, home to auto giant Kia Motors and drug manufacturer Pfizer, has reported an electricity deficit of 8.7 per cent, as mentioned by Reuters.

Facor Alloys, a producer of ferrochrome used in manufacturing stainless steel, said that its output had reduced by 50 per cent due to power cuts in Andhra Pradesh state.

Not only Andhra Pradesh; Gujarat, Maharashtra, and Uttar Pradesh also have resorted to load shedding or forced power cuts. Jharkhand, Bihar, Haryana and Uttarakhand have also reported power shortages, the news agency added.

Coal inventories dipped to the lowest since 2014 at the beginning of the financial year to nine days, against the government guidelines of 24 days' worth of stock.

Shailendra Dubey, the chairman of All India Power Engineers Federation, told India Today that as per Central Electricity Authority’s latest daily coal report, the coal stock at 81 out of a total of 150 thermal power stations using domestic coal is critical. The condition in 28 out of 54 private sector thermal plants is equally bad.

Dubey said demand for electricity in Uttar Pradesh reached 21,000 MW, while supply is around 19,000-20,000 MW. Union Power Minister RK Singh blamed the steep rise in the prices of imported coal amid the Russia-Ukraine war as well as the lack of adequate availability of railway wagons to transport coal to power stations.

Moreover, in a recent report, Nomura stated that if the coal supplies do not improve, it could lead to a stagflationary shock, which India's economy still recovering from the aftereffects of the Covid induced lockdowns shock, can ill afford. The report added that nearly 100 out of 173 power plants have critical coal stocks, which is less than 25 per cent of normative levels.

ELECTRICITY DEMAND

Electricity demand has surged due to a combination of factors, including the reopening of industrial activity and the early onset of the peak summer season. Weather officials have forecast maximum temperatures above normal in April in many northern and central regions, after a record-breaking month of March.

Harry Dhaul, director-general of the Independent Power Producers Association of India, said that due to weather changes peak demand has shot up after midnight due to the increasing use of air conditioners.

And, a shortage of railway rakes to transport coal is exacerbating the coal supply chain. There is an 8.4 per cent dip in the number of trains per day committed by Indian Railways to transport coal. While around 453 trains are required by utilities, the number of trains available from April 1-6 was 379 per day.

With the increasing demand, coal-fired power generation is likely to be up by 17.6 per cent. Some non-power sectors are already seeing a cut in coal supplies. The power ministry has also asked utilities to increase coal imports for blending to 36 million tonnes, the highest in six years.

The Union Power Ministry has recommended the import of coal for blending up to 10 per cent to ensure adequate stock in the next few months but due to this blending of imported coal, the generation cost is likely to increase by 30 to 40 per cent.

Now, Maharashtra, Gujarat and Tamil Nadu, three of India’s most industrialised states, plan to import 10.5 million tonnes of coal in the coming months. It must be kept in mind that India had a plan to cut coal imports. So, going back on the plan highlights the coal crisis.

Maharashtra plans to import 8 million tonnes for ‘blending purposes’, following the 2 million it already ordered, while Gujarat will place orders for 1 million tonnes next week. Tamil Nadu is aiming to import 20 per cent of its coal requirements, following orders to import 1.5 million tonnes. These three states account for nearly a third of India’s electricity demand in 2021. The imports planned by these states would be higher than annual imports by state government-run utilities for blending in at least 6 years.

Karnataka, Uttar Pradesh, Madhya Pradesh, Punjab and Haryana have also been asked to import a total of 10 million tonnes of coal by the government. Among them, Punjab has committed to importing 625,000 tonnes. India's state-run power producer NTPC also has plans to increase coal imports.

Countries like South Africa, Australia and Indonesia are likely to be the biggest beneficiaries of India’s coal purchases. Russia is also a possible supply source.

(With Reuters, India Today inputs)

Also read: States in India to see more power cuts this summer amid coal shortage

Also read: Maharashtra, Gujarat, TN plan huge coal imports amid shortage